Entrepreneur to employee: Manu Jain’s reverse journey of success with Xiaomi in India

It’s normal for people to leave McKinsey, in fact, it’s even encouraged. Because much of their business comes from ex-employees who work with different industries.

But when Manu [Jain] spoke with the many partners at the firm, they all said, “You are making a mistake.”

The mistake was the idea of leaving McKinsey to start something on his own. That too, in the tech industry. Many had tried, and most of them had failed.

“Join a PE or VC firm,” they advised. “Or the strategy division of a large corporate.”
Manu listened to them all, but he wasn’t swayed.

“The world around me was changing, I could see it, I could feel it...” Now was the time to be that change. So he started exploring and evaluating various ideas in the tech domain: online healthcare, e-commerce for baby products, so on and so forth. When a junior from IIM Calcutta, Praveen Sinha, approached Manu. He was co-founding a company which was being incubated by Rocket Internet.

“Join us! We’re going to change the way India shops,” he said.

Manu’s first instinct was to say “no”. At that time, Flipkart sold books online – sure, that was possible. But who bought clothes and shoes online? The idea just didn’t seem to have merit.

It took about two months for Manu to get convinced ki yeh ho sakta hai, or at least, try karna chahiye. And he came on-board as a co-founder at jabong.com.

It was very early days for e-commerce. When they launched in January 2012, the Jabong team reckoned, “If we do 100 transactions a day, we will be a ‘great success’.”

By March, they had crossed 1,000 transactions a day – which was unbelievable! And one very interesting trend was coming to the fore. “We could see that 60% of our traffic came from mobile phones.” Back then, people weren’t using smartphones with large screens, and neither did Jabong have a mobile-friendly site or an app. It was completely counter-intuitive That’s when Manu realised that, in India, mobile was going to be THE thing. The engine of growth, the agent of change.

“I was hugely fascinated by the smartphone...the way it was giving access to millions of people who’d never used a computer at all.” Somewhere in 2013, Manu stumbled upon a blog about a company called Xiaomi (pronunciation: Shao-me). The company was just 3 years old, had started selling phones in 2012, but was already one of the best-selling brands in China. The author of the blog stated – “this is one of the most incredible companies in the mobile space”.

Now most companies either focus on software (Google, Facebook, Microsoft) or hardware (Apple, Samsung, Nokia, Micromax). Xiaomi was the rare company doing both.

Manu reached out to Naveen Tewari, friend, mentor and also founder of InMobi.

“Hey, Naveen, do you know about Xiaomi?”

“Yes, I do,” came the reply.

“Do you mind reaching out to the founder so I can have a chat with him?” requested Manu.

At that point, he wasn’t looking for a job, or anything else in particular. It was just curiosity. Company thi bhi kaafi interesting.

The founder of Xiaomi is maverick Chinese entrepreneur Lei Jun. Prior to Xiaomi, he set up several multi-billion dollar businesses such as Kingsoft (listed on the Hong Kong stock exchange), Joyo (e-commerce site sold to Amazon, now Amazon China) and social gaming platform YY corporation (listed on NASDAQ).

Then, he “retired” from business and did some crazy stuff. Like acting in movies (in the remake of Godfather in China, he played the role of – who else? – the godfather).

But then, in 2010, Lei Jun made a comeback. He started Xiaomi as a software company, which built an OS (Operating System) that could be used on any android phone.

“The cool thing was that Xiaomi was building features where people were telling us what to build. So the ideas were all crowdsourced.”

Xiaomi’s OS became hugely popular in the first two years, but Lei Jun wasn’t satisfied. He wanted more users. Now, every person out there is not geeky enough to download and install an OS. So, what if Xiaomi could make and sell its own phones, pre-loaded with the OS? But, they did it very differently from other hardware companies.

Lei Jun’s philosophy was: cut down costs, pass on benefits to the users. As a result, as soon as they were launched, Xiaomi phones became hugely popular in China.

It was fascinating stuff and Manu Jain was lucky enough to establish a connection with Bin Lin, one of the eight co-founders (and a former head of engineering, Google China). They started having casual conversations on the phone, once a month. Just exchanging notes on India, on China and technology trends.

Meanwhile, Jabong had become one of the two largest fashion e-commerce companies in India. But in November 2013, Manu decided to leave Jabong.

“It was mainly for personal reasons. I had just become a father and wanted to spend time with my wife and son...”

All this while he’d been working from Delhi while Minu was in Bangalore. That didn’t feel right anymore. Besides, Manu had set his heart on doing something of his own, in the mobile space. Kya karna hai, yeh pata nahin. So he did what any confused soul might do – set off on a 20-day backpacking trip.

But this trip was not about getting lost in the mountains of Nepal, it was all over China, from Beijing to Shanghai and Shenzen. There, Manu met a whole lot of internet entrepreneurs, mobile entrepreneurs, understood the Chinese start-up ecosystem.

Were these companies open and willing to meet a complete stranger? Surprisingly, yes. They were as keen to learn about India as Manu was to learn about them.

“Of course, I did have two good contacts in China who helped me set up thirty-five meetings in a very short span of time!”

It was also during this trip that Manu met the founders of Xiaomi for the first time, in person.

Three months later, Manu was still figuring out what to do, when the Xiaomi team pinged him.

“Hey, we are in India, would love to catch up with you over a coffee.”

That’s when Bin Lin shared the company’s plans to enter India. Hence, they were looking for an India business head.

“We know you and think you understand our philosophy. Will you set up this venture for us?”

Manu was surprised. He’d been thinking of the mobile space but more in the area of an app or a service. Not selling phones themselves. Clearly, he lacked the domain expertise. But that was precisely the reason Xiaomi found him attractive. A person with mobile handset sales experience would have a certain mindset, ki aise bechna hai. Whereas, Xiaomi did things very differently. Jiske liye ek alag kism ka banda chahiye tha.

Were you at all apprehensive about joining a Chinese company, I ask. That wasn’t a concern here, says Manu, because the founding team of Xiaomi had a lot of international exposure. They’d studied at Stanford and MIT, lived and worked in Singapore and Silicon Valley. What’s more, Hugo Barra, from Google’s android team, had recently joined the company. Adding to its multicultural credentials.

Of the eight co-founders, seven spoke excellent English. Lei Jun could understand the language but was more comfortable responding in Chinese, making use of an interpreter.

Well and good. What really tipped the scale, however, was the vision and mission of Xiaomi.

The business model of Xiaomi was unique, it was disruptive.

“I sensed this could be a huge opportunity. To really build something.”

Manu took the decision to join Xiaomi in April 2014, and joined in May. There was
no team, no office, just Manu Jain, working out of a Costa Coffee next to the Flipkart headquarters in Bangalore. The usual modus operandi of any start-up founder. And the mindset with which Manu was working, as Operations Head, India.

Back then “Xiaomi”, or Mi phone, was unknown in India. So, who exactly would buy this Chinese brand? And where would it sell from? Setting up a retail network would take many months and a lot of investment. Whereas in China, Xiaomi had followed a unique strategy of selling its phones from just one location – online.

“I went to a lot of industry experts and they said your strategy won’t work in India. You need to have TV ads, print ads and give a lot of margin to retailers...”

They could be right but, Manu reasoned, there was no harm in trying. He went ahead and imported 10,000 Mi3 handsets. Why 10,000? Because, at that time, Xiaomi India had a Facebook page with 10,000 followers. These folks knew about the company, they just might buy the handset.

22 July 2014 saw the first ever sale of Mi phones on Flipkart. A good amount of traffic was expected. But nobody – not Flipkart, not Xiaomi – was prepared for what actually happened.

More than half a million customers attempted to log in and buy the phone. For the first time in its history, the Flipkart site crashed. Sachin and Binny Bansal posted an apology on Twitter: “Working on getting this fixed ASAP.”

The Xiaomi team in China – and its one-man army in India – were ecstatic. We have arrived.

So, what was the magic? It was all in the product. Mi3 boasted incredible specs, comparable to Google’s Nexus phone. What was even more incredible was the pricing of Rs 13,999 (as against the Rs 25-30,000 price of the Nexus). There was huge positive word-of-mouth. So huge that Xiaomi quickly announced a second sale – on 29 July.

This time Flipkart was taking no chances. They built a new tech platform – in just one week – to handle the traffic that was sure to come its way.

On D-day, Manu Jain was with Sachin Bansal, at the Flipkart office, counting down the seconds. At exactly 2 pm, he pressed the “buy now” button. The message on the screen was “out of stock”. Oof! Site phir se crash ho gaya? This was disappointing. But then the Flipkart team broke the good news.

“Your entire stock – 10,000 units – sold out in the first 2 seconds!”

A third flash sale on 5 August saw 15,000 Mi3 phones sell out in the blink of an eye. So now the challenge was how to procure enough phones from China to fulfil demand. Manu realised that importing small batches was expensive and a hassle. That’s when he came up with a crazy idea: “Let’s charter flights!” The plane would carry just one precious cargo: Mi phones.

Excerpted with permission from Shine Bright: Inspiring Stories of CEOs who are Intrapreneurs, Rashmi Bansal, Westland.